On February 2, a bipartisan group of six U.S. Senators issued a “discussion draft” 340B reform bill, called the SUSTAIN 340B Act, and a related explanatory document and supplemental Request for Information (RFI). The Senators also released a one-page letter to 340B stakeholders, expressing their view that “it is necessary to pass legislation in the 118th Congress that provides clarity, transparency, and accountability in the 340B program in order to ensure the program remains strong, long into the future.” The discussion draft addresses a number of critical and controversial aspects of the 340B program, such as the use of contract pharmacies and the patient definition, and the RFI includes specific questions and topics for which the Senators seek further stakeholder input. RFI responses are due by no later than April 1, 2024. While the bill’s likelihood of passage remains uncertain in this Congress, the RFI is an important opportunity for 340B stakeholders to provide input on 340B reform.
While not yet formally introduced, the discussion draft includes language that, if ultimately enacted, would impose new 340B program requirements and restrict a number of practices affecting manufacturers, covered entities, and other stakeholders in the 340B program. The discussion draft also would provide the Secretary of Health and Human Services (HHS) with rulemaking authority for several additional aspects of the program.
Key provisions in the discussion draft include:
- Contract Pharmacies. Covered entities would be permitted to use contract pharmacies, and manufacturers would be prohibited from imposing data collection or other conditions on contract pharmacy use. The discussion draft would also amend the manufacturer civil monetary penalty penalties (CMPs) provision of the statute to expressly state that a manufacturer can be charged CMPs if it refuses to deliver a drug to a contract pharmacy or if it places conditions on the ability of a covered entity to purchase a covered outpatient drug at or below the 340B ceiling price. Additionally, the discussion draft would impose several requirements on covered entities and their contract pharmacies, and it would require the Secretary to review covered entities’ contract pharmacy agreements to ensure compliance with those requirements and to provide program oversight. The RFI requests feedback on a number of areas specific to contract pharmacies, including whether and how geographic limitations or other restrictions could be imposed.
- Patient Definition. The discussion draft does not include a definition for “patient,” but it leaves a placeholder for a “Patient Definition” section. The Senators’ letter to 340B stakeholders identifies this area as one for which they seek more information, and the RFI includes a number of specific questions for stakeholder feedback. These include the factors that should inform whether a patient-covered entity relationship exists, the length of time involved in defining the patient relationship, and issues surrounding patients of multiple covered entities.
- Requirements for Child Sites. All child sites would require registration and be subject to requirements to ensure that the child site is closely related to the covered entity, such as unified financial assistance policies, common ownership and governance, common staffing, and integrated medical records systems. The discussion draft also would require the Secretary to promulgate rules “to establish a procedure” for child sites that were deemed qualified prior to enactment of the SUSTAIN 340B Act but that do “not meet the criteria” specified in the discussion draft for child sites. Here, too, the RFI solicits feedback on several topics, including the level of oversight appropriate for child sites, their role in communities, and the special needs of rural areas.
- Transparency. The discussion draft would require covered entities to report, and the Health Resources and Services Administration (HRSA) to publish in a searchable format, specific information about covered entity use of the 340B program, including the number of individuals who were dispensed or administered 340B-priced drugs, charity care costs, patient demographics, contract pharmacies, the discount realized under 340B, and a description of the covered entity’s use of 340B savings.
- Enhancing Program Integrity. The discussion draft would add another audits provision to the statute in addition to the government and manufacturer audits of covered entities already authorized under the 340B statute. The provision would authorize HRSA to audit covered entities, including their contract pharmacies and child sites, and manufacturers. It also would require the Secretary to “issue guidance for drug discount program auditors” and to “ensure” certain consequences for covered entities that are found to be out of compliance with 340B eligibility criteria.
- Establishment of National Clearinghouse to Prevent Duplicate Discounts. The discussion draft would require the Secretary to enter into a contract with an independent, third-party entity to serve as a national clearinghouse to prevent duplicate discounts. The clearinghouse would obtain claims-level data from state Medicaid agencies and covered entities and share certain data with manufacturers to prevent duplicate rebates and discounts. The discussion draft would require covered entities to repay manufacturers when a duplicate discount is identified.
- New Requirements for Insurers. The discussion draft would prohibit commercial insurers from adjusting reimbursement to account for 340B status.
- 340B User Fee Program. The discussion draft would create a new 340B user fee program to help fund program administration. The Secretary would collect user fees from covered entities and would be required to promulgate regulations to implement the user fee program.
- Additional Provisions. The discussion draft would require various studies and reports, including a Medicaid and CHIP Payment and Access Commission (MACPAC) report to Congress “on the efforts of State Medicaid agencies to prevent duplicate discounts under the 340B program” and a study by HHS “on dispensing fees” associated with contract pharmacies. It also would authorize additional funds to the HHS Office of Inspector General for purposes of 340B oversight and enforcement activities.
The Senators’ letter to stakeholders states that Senators intend to keep the RFI responses internal and that “they will not be posted publicly.” If you have any questions or would like to discuss, please reach out to your Sidley contact or one of the attorneys listed below.
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